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State tax claim filings: Check and check again

TAX BLOG
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November 15, 2016

Busy season is winding down, the holidays are approaching and year-end tax provision is on the minds of many tax departments. It’s a perfect time to consider those state tax refund claims or assessment appeals that you may be sneaking in before the end of the calendar year – and also the right opportunity to identify one of the most mundane details that can have the greatest impact on whether those claims are heard: Is your claim addressed correctly?

It’s obvious to many that addressing a state tax claim to the department of water and power would not qualify as timely and properly filed. For one taxpayer in Alabama, however, filing with the incorrect internal division of the state’s Department of Revenue was still not enough to be a proper filing. The taxpayer in Smiths Medical ASD, v. Department was no doubt surprised by that result – but let’s take a quick look at the facts. The taxpayer was subject to an assessment and provided a 30-day appeal period to file with the department’s Administrative Law Division. The taxpayer filed with the Corporate Income Tax Section within the 30 days, which in turn forwarded the claim to the correct division. While the court ultimately determined the claim was postmarked within the 30-day period, it was addressed incorrectly, and therefore dismissed for lack of jurisdiction.

While some may view the dismissal as a harsh result, it provides a good reminder to check – and check again – all of a state’s filing requirements. State rules may dictate a number of procedures, including, and certainly not limited, to the following:

Is the claim addressed correctly?

Some claims must be addressed to the particular suite or room number of an address.

How is the claim delivered, i.e., must it be postmarked by the U.S. Postal Service in order to evidence a timely filing within a limitation period?

Claims sent through UPS or FedEx may provide efficient and quick transport, but if the claim is lost, those filings will not have a U.S. postmark to rely on.

Are there documents that must be attached to the filing, e.g., original tax returns and schedules?

And for practitioners, is a power of attorney required?

Taxpayers may also want to consider date stamps for hand deliveries or follow-up confirmation calls for mailings to ensure the claim is in process. Following a state’s instructions to a “T” will help ensure your claim is timely received and reviewed – and clear of avoidable oversights.

Brian Kirkell

Principal

Brian provides advanced technical analysis of state and local tax issues important to middle market businesses. Reach him at brian.kirkell@rsmus.com.

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